Tag: Barack Obama

On Not Leaving Iraq

The U.S. ambassador to Iraq expects to have 17,000 people on his staff after the United States “withdraws” from Iraq at the end of the year, he told the Senate this week. This is astounding. A typical American embassy in a small country might have 100 employees, in a big country such as Great Britain or Russia maybe a few hundred. A staff of 17,000 (including contractors) is not an embassy, it’s an occupation force. Or at least a viceroy’s staff. Here’s the Washington Post report:

The top U.S. diplomat in Iraq on Tuesday defended the size and cost of the State Department’s operations in that country, telling lawmakers that a significant diplomatic footprint will be necessary after the withdrawal of U.S. troops at the end of this year.

James F. Jeffrey, the U.S. ambassador in Iraq, told the Senate Foreign Relations Committee that his staff of 8,000 will grow in the coming year to about 17,000 people, the vast majority of whom will be contractors.

And while the State Department is spending about $2 billion annually on Iraq operations now, it plans to spend an additional $1 billion on the construction of facilities in each of the next several years….

We’re spending $2 billion a year now on State Department operations in Iraq alone, and we intend to spend $1 billion a year on construction for some years to come. That’s some withdrawal! I know that when Sen. Barack Obama asked to be entrusted with the presidency by repeatedly saying, “I will bring this war to an end in 2009. It is time to bring our troops home,” he only said “troops.” But I can’t believe that the voters who heard him anticipated leaving thousands of Americans and spending billions of dollars in Iraq for many years.

If members of Congress are looking for ways to cut a trillion-dollar deficit, they might look at our construction and employment and nation-building plans in Iraq.

Karl Rove’s Big-Government Myth

Karl Rove, the architect of Republican victories in 2000 and 2004 and Democratic victories in 2006 and 2008, denounces President Obama’s “spending binge” and “liberal activism” as described in the State of the Union address. The Wall Street Journal’s tagline on the column is, “On Tuesday, Republicans offered an alternative to the president’s big-government vision.” What Rove omits is that he and President Bush started the spending binge, delivered big government, and indeed came into office with a big-government vision, as Ed Crane pointed out in 1999.

Just take a look at the analysis in Rove’s Wall Street Journal column:

Most of his hour-long speech was a paean to liberal activism, as the president called for redoubling outlays on high-speed rail and “countless” green energy jobs.

Liberal boondogglery indeed. But Rove’s former colleague, White House speechwriter Michael Gerson, wrote on the same day in his Washington Post column:

 In his 2006 State of the Union address, which I helped write, President George W. Bush proposed a 22 percent increase in clean-energy research at the Energy Department, a doubling of basic research in the physical sciences and the training of 70,000 high school teachers to instruct Advanced Placement courses in math and science. I have no idea if these “investments” passed or made much difference. I doubt anyone knows.

Green nonsense is rampant in Washington.

Rove criticizes Obama for

a federal budget that’s increased 25% in two years, raising government’s share of GDP to 25% from roughly 20%.

Obama is a world-class spender. But spending increased 83 percent during Bush’s presidency, from $1.863 trillion to $3.414 trillion. He increased federal spending faster than any president since Lyndon Johnson. And yes, Obama is pushing the government’s share of GDP up; but Bush increased the federal government’s share of GDP by 2.2 percentage points, before the financial crisis, the bailouts, and TARP.

Rove writes:

The challenge is about more than budgets and debt. It is about government’s basic purposes and its role in our lives. If we don’t act soon, the nature of American society will change in deep, lasting ways.

Yes, that is the real problem. I have written critically of Obama’s “sweeping statist agenda.” But the Bush administration gave us stepped-up federal intrusions into our local schools, the biggest expansion of entitlements in 40 years, a proposed constitutional amendment to nationalize marriage law, unconstitutional restrictions on core political speech, intrusion of the federal government into Terri Schiavo’s hospital room, and, in the words of Gene Healy and Timothy Lynch,

a view of federal power that is astonishingly broad, a view that includes a federal government empowered to regulate core political speech — and restrict it greatly when it counts the most: in the days before a federal election;  a president who cannot be restrained, through validly enacted statutes, from pursuing any tactic he believes to be effective in the war on terror;  a president who has the inherent constitutional authority to designate American citizens suspected of terrorist activity as “enemy combatants,” strip them of any constitutional protection, and lock them up without charges for the duration of the war on terror — in other words, perhaps forever; and  a federal government with the power to supervise virtually every aspect of American life, from kindergarten, to marriage, to the grave.

Bush and Rove, too, changed American society in deep and lasting ways.

Rove writes that Paul Ryan, the new Republican chair of the House Budget Committee, “knows that reforming these programs, especially Medicare, is the only path to fiscal sanity and economic growth.” Too bad the Bush administration made the Medicare problem $18 trillion worse.

Rove writes that

the debate about the role and purpose of government has been joined in a way America hasn’t seen in three decades.

Let’s hope so. We at Cato have been trying to have that debate for years, including Ed Crane’s 1999 critique of the Bush-Rove big-government vision and Michael Tanner’s 2007 book, Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution. And certainly Rove’s comrade-in-arms Gerson has been vigorously arguing against the limited-government libertarian vision that opposes Bush-Obama statism.

Finally, Rove reminds us:

The total debt was $10.6 trillion before [Obama’s] inaugural and $14.2 trillion today.

True. President Obama is increasing deficits and debt even faster than President Bush, under whom the national debt rose by $4.9 trillion. But it takes a lot of chutzpah for the architect of the biggest debt increase ever to criticize the guy who comes along and tops the record.

Surely the Wall Street Journal can find more credible critics of President Obama’s big-government vision than people who ran the “big government disaster” that was the Bush administration.

Krugman (Both of Them) on Competitiveness

When it became clear that President Obama would make “competitiveness” a theme of his SOTU address, I looked forward to seeing Paul Krugman’s statement pointing out how much nonsense that is. Here he is, after all, in his excellent 1997 book, Pop Internationalism (MIT Press):

…International trade, unlike competition among businesses for a limited market, is not a zero-sum game in which one nation’s gain is another’s loss. It is [a] positive-sum game, which is why the word “competitiveness” can be dangerously misleading when applied to international trade.

Sure enough, President Obama’s speech last night was peppered with references to “the competition for jobs,” “new jobs and industries take root in this country, or somewhere else, “the competion for jobs is real,” etc. And of course there was a healthy dose of the usual mercantalist obsession with exports.

Although written before the President’s address was delivered, what would Paul Krugman 2.0 think of this sort of talk? The title of his column Sunday was certainly encouraging: “The Competition Myth.” But the substance of the column went in a … er… different direction from that which I had anticipated/hoped:

…talking about “competitiveness” as a goal is fundamentally misleading. At best, it’s a misdiagnosis of our problems. At worst, it could lead to policies based on the false idea that what’s good for corporations is good for America

So what does the administration’s embrace of the rhetoric of competitiveness mean for economic policy?

The favorable interpretation, as I said, is that it’s just packaging for an economic strategy centered on public investment, investment that’s actually about creating jobs now while promoting longer-term growth. The unfavorable interpretation is that Mr. Obama and his advisers really believe that the economy is ailing because they’ve been too tough on business, and that what America needs now is corporate tax cuts and across-the-board deregulation. [emphasis mine]

In other words, Krugman’s objections to the “competitiveness” rhetoric are based on his fear that it will lead to policies favorable to corporations, not that the whole concept is flawed.

[Disclaimer: the above is by no means an exhaustive analysis of the problematic parts of the column]

I yield to no-one in my admiration for Paul Krugman, trade economist. He made a real contribution to the discipline I’ve loved since I was a teenager. But Paul Krugman, columnist…not so much.

Is Obama Serious?

Today POLITICO Arena asks:

Although President Obama proposed a five-year, $40 billion per year freeze in non-security, discretionary spending, and Republicans want to cut spending by at least $100 billion a year, is either side serious about real spending cuts?

My response:

With uncontrolled deficits well into the future and a debt exceeding $14 trillion, for Obama to propose saving only $40 billion per year in discretionary spending over the next five years, while “investing” in pie-in-the-sky things like high-speed rail, wind farms, environmentally destructive ethanol, and the like, is worse than unserious – it’s an insult to our intelligence. Like Obama, many Republicans too treat military spending, among other things, as sacrosanct, but at least they’re proposing more serious budget cuts.

The deeper problem, of course, is systemic. Socialism, a large dose of which we have in America today, brings out the very worst in people. In the name of collective responsibility, it saps and then destroys individual responsibility, leading to a war of all against all. No one wants “his” entitlement cut for fear that his neighbor might profit at his expense – because, after all, “we’re all in this together.” Suspicion and envy are the order of the day. Meanwhile, dreamers like Obama (at least that’s his pose), who promote our collective drift, either can’t or won’t grasp the hard reality until it crashes down upon them, and us, as it is doing now in several of our states and in Europe. For the “hard-hearted” realists among us, November 2012 can’t come soon enough.

Cato Live Blog of President Obama’s 2011 State of the Union Address and GOP Response

Please join us at 9:00pm Eastern on Tuesday, January 25, 2011 for live commentary during President Obama’s State of the Union address and the response given by House Budget Chairman Paul Ryan (R-Wisc.). Here is our panel of expert bloggers (click each name for their respective Cato@Liberty archives):

Other Cato scholars may also be contributing.

Come back to this page at 9:00pm Eastern on Tuesday, January 25, 2011 to join us–we look forward to having you, and to sharing our insights with you.

Also, don’t forget to tune into our Facebook page immediately following this live blogging event for live video reaction to the speeches from Vice President Gene Healy and Research Fellow Julian Sanchez.


Fannie & China: 2 Birds, 1 Stone

Chinese President Hu Jintao’s visit to Washington brought renewed focus on China’s currency.  It was likely the largest point of discussion between President Obama and President Hu.  I suspect a less public, but related, issue was China looking for some certainty that America would make good on its obligations; after all, China is our largest lender.

What is often missed is the connection between these two issues:  currency and debt.  When China receives dollars for the many goods it sells us, instead of recycling those dollars into the purchase of US goods, it uses that money mostly to buy US Treasuries and Agencies (Fannie/Freddie securities).  These large Treasury/Agency purchases (foreign holdings of GSE debt are over $1 trillion) have the effect of increasing the demand for dollars and depressing that for yuan, resulting in an appreciation of the dollar relative to the yuan.  This connection exposes the hypocrisy of President Obama’s complaints about China currency manipulation - without massive US budget deficits, China would not be able to manipulate its currency to the extent it does.  If the US wants to end that manipulation, it can do so by simply reducing the outstanding supply of Treasuries and Agency debt.

Another solution, which would also do much to end the “implicit guarantees” of Fannie Mae and Freddie Mac, is to take Fannie and Freddie into a receivership, stop the US taxpayer from having to cover their losses, and shift those losses to junior creditors, which include the Chinese Central Bank.  Were the Chinese to actually suffer credit losses on their GSE debt, they would quickly start to reduce their holdings of such.  They might also cut back on Treasury holdings.  These actions would force the yuan to appreciate relative to the dollar.  And best of all, it would end the bottomless pit that Fannie and Freddie have become.  It is worth remembering that even today, under statute, the Federal government does not back the debt of Fannie and Freddie.  It is about time we also teach the Chinese a lesson about the rule of law, by actually following it ourselves. 

Of course this would increase the borrowing costs for Agencies (and maybe Treasuries), but then if China were to free float its currency, that would also reduce the demand for Treasuries/Agencies with a resulting increase in borrowing costs.  We cannot have it both ways.

Barack Obama, Mr. Deregulation?

In today’s much talked-of Wall Street Journal op-ed, President Obama reaches for common ground with critics of excessive government regulation – not a constituency he’s had much time for in the past. He announced an executive order requiring agencies to review existing regulation for outdated or unwise rules deserving of being struck from the books. That drew measured praise from organized business groups, something the President has not had much of lately.

Many left partisans are aghast, just as they were when Bill Clinton dashed for the political center after his own mid-term electoral “shellacking.” Salon complains that Obama’s op-ed “reads like an apology to the business community,” while Rena Steinzor fears the move signals a decline in influence for the administration’s regulatory ultras, such as Margaret Hamburg (FDA), Lisa Jackson (EPA), and David Michaels (OSHA).

Environmental law expert Jonathan Adler thinks the new executive order might do some good:

The Executive Order is here. It reaffirms the basic principles outlined in President Clinton’s Executive Order 12866, issued in September 1993, and continues to require agencies to conduct cost-benefit analyses of proposed rules. As noted in the President’s op-ed, it also requires agencies to engage in “retrospective analysis” of existing rules so as to accelerate the pace at which outdated regulations are revoked. Specifically, it requires all agencies to develop a plan for such retrospective review within 120 days. If the White House Office of Information and Regulatory Affairs ensures such reviews are meaningful, this could be a significant and positive step.

That’s a big “if.” Over the past two years, OIRA has not restrained its administration colleagues from making 2010 by far the biggest year for new regulatory burdens in memory (Heritage helpfully assembles details.) The most burdensome new rules are not from the best-known areas of new legislation, such as ObamaCare and financial reform, but from the environmental area. That makes it especially disturbing that, as Ted Frank points out, the President’s op-ed “singles out the top-down and economically inefficient fuel-economy regulation as a good one.”

So what does Obama see as an example of an excessive regulation needing repeal? The example he offers is the inclusion of the sweetener saccharin in the category of hazardous waste. Really? Saccharin as hazardous waste? Amid dozens of high-stakes, much-studied regulatory controversies, the only one he could come up with is one that – with all due respect to the people who make the little pink packets – is of hardly any significance to the wider economy, and not much more as a matter of principle?

Even this administration could have made better deregulatory boasts than that. For example, in a fit of sense, the Obama Justice Department a while back adopted regulations specifying that the Americans with Disabilities Act should no longer (as of this March) be interpreted to require restaurants, theaters and other Main Street businesses to admit patrons’ non-canine “service animals” such as monkeys, goats, snakes and spiders.

But it was almost as if his point was to pick a regulation so minor that no one cared much about it one way or the other. Had the President’s speechwriters been looking for an example of a hazardous-substance rule that would actually get people talking about regulatory overreach, they might have picked EPA’s dairy-spill regulations, which (in the words of one report) “treat spilled milk like oil, requiring farmers to build extra storage tanks and form emergency spill plans….” That one does have big and widespread economic costs.

Whoops – not a good example. That one’s not being repealed – EPA at last report intended to go forward with it. Can we really assume anything much is changing here besides the atmospherics?